No. 1114 - Assessing the risks of asset overvaluation: models and challenges

by Sara Cecchetti and Marco Taboga
April 2017
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We propose methods to compute confidence bands for the fundamental values of stocks and corporate bonds. These methods take into account uncertainty about future cash flows and about the discount factors used to discount the cash flows. We use them to assess the current degree of under-/over-valuation of asset prices. We find no evidence of over-valuation of the stocks and corporate bonds of the major economies.

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  1. 03 May 2017
    No. 1114 - Assessing the risks of asset overvaluation: models and challenges
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